Car Sales Steering Near 5.9 Million Units in FY27

Pune:India's passenger vehicle (PV) industry is projected to achieve record sales in fiscal year 2027 (FY27), with annual volumes expected to grow 5–7 per cent to approximately 5.9 million units, Crisil Ratings said on Wednesday.

It said the vehicle sales were driven by the reduction in the goods and services tax (GST) last September and sustained consumer preference for utility vehicles.

However, rising commodity prices, geopolitical tensions in West Asia and fuel-efficiency norms are expected to increase cost and investment pressures on automakers.

CRISIL Ratings, which analyzed companies accounting for near 94 per cent of wholesale PV volumes, said the September 2025 GST reduction revived demand sharply.

Domestic PV sales grew 16.7 per cent in the second half of FY26, reversing a 1.4 per cent decline in the first half and helping the auto industry end the year with 7.9 per cent growth.

Domestic sales account for nearly 86 per cent of total output, while exports make up the remainder.

“The GST tailwind will continue in fiscal 2027, though its intensity will moderate gradually,” said Anuj Sethi, Senior Director at Crisil Ratings.

He said the small car segment, which contributes around 30 per cent of domestic volume, is expected to grow 2-4 per cent on improved affordability and renewed first-time buyer interest amid a stable interest rate environment.

Utility vehicles will continue to lead with 7-9 per cent growth driven by a structural consumer preference for larger feature-rich vehicles and a widening model range across price points.

“We expect their share in the overall volume mix to continue rising from 67 per cent last fiscal to 69 per cent in fiscal 2027,” Sethi noted.

CRISIL warned that the West Asia conflict could hurt the sector through higher fuel, commodity and freight costs.